The anticipated growth in demand from the US and Europe is expected to result in a 30% increase in Alcoa's (AA.US) Q4 earnings.

Aluminum Corporation of America (AA.US) will report its 2024 fourth-quarter earnings before the market opens on Wednesday (U.S. market close) at 1:00 a.m. ET. The company is expected to see revenue growth from the previous quarter. The market expects revenue of $3.4 billion, up 30.1% YoY; and EPS of 91 cents, up 262.5% YoY.

Business Focus

Higher aluminum demand in Europe and North America is expected to benefit Alcoa's aluminum business in the fourth quarter of 2024. In addition, the strong momentum in the construction market and the recovery in the packaging industry may promote aluminum business sales. For the fourth quarter, the market expects third-party aluminum sales of $2 billion, up 18.9% YoY. The total aluminum sales are expected to be $1.97 billion, up 16.7% YoY from the reported figure.

Alcoa's alumina business has benefited from increased alumina shipments and increased production at its smelter. The market expects third-party alumina sales of $1.3 billion, up 72.3% YoY. The total alumina sales are expected to be $2.1 billion, up 54.1% YoY.

The synergies from the company's acquisition are expected to boost revenue. In August 2024, Alcoa acquired Alumina Limited. The acquisition strengthened its position as a global pure-play aluminum company.

Moreover, the decline in raw material prices and energy costs for both segments may support the company's performance.

The production cut at Alcoa's Gaojinna refinery may put pressure on the company's sales.

Given the company's broad geographic footprint, its operations are exposed to global political risks and foreign exchange headwinds. A stronger dollar may hurt Alcoa's overseas business this quarter.

Jefferies names it a top pick

Alcoa (AA.US) was previously named one of the top picks for mining stocks this year by Jefferies. Analyst Christopher La Femina said, "While we have recently become more cautious on the near-term outlook for the sector due to cyclical factors, and we believe the risk to consensus is down, we believe it is too late to downgrade our rating now," "All things considered, after a significant pullback recently, we are inclined to buy our preferred mining and steel producers."